Introduction

Health care is a provocative issue that is seen by some as an important responsibility

for the state and one that should be provided for all citizens. Others view health care as a
private matter and any attempts at state intervention or control as a violation of privacy and
freedom.
As some Asian economies, such as Taiwan, Hong Kong, and South Korea, have
shown miraculous economic development over the past few decades, they have also shown
important initiative in bettering the social environment for their citizens. Some authors even
argue that the economic growth of nations such as South Korea and Taiwan cannot be
separated from its developmental state (H.-j. Kwon, 2005). It is often reported that the fast
pace of economic growth in Asian economies was made possible by government investments
in health care and education, along with other governmental programs such as land reform.
This paper will look at the three economies of Taiwan, Hong Kong, and South Korea
and the health care systems that developed in each. I hope to show that there is not one right
way to create a workable health care system, but factors such as history and culture come
together to shape the ideas of what the system needs to do and be. Although there are cultural
similarities, such Confucian ideas, that are common to each case discussed, the history and
how these ideas helped to shape the health care system are all different.
The paper is divided into two sections. The first section will look at each health care
system independently. In this section a short history and background of how each system
came into creation. The second section will be a short discussion that will look at the systems
together and positives and negatives of each system.

Taiwan
Taiwan is the relative newcomer to universal health coverage in Asia. Taiwan created
National Health Insurance in 1995 to provide health insurance for all it citizens. Taiwan has a
long history that includes different ruling governments. Each government has its own unique
characteristics and policies, but each one can also be said to have built on or borrowed
structures that were left by the previous rulers. For example, the Japanese used the pao-chia
system that was started during the Kongxi era to keep track of the local Taiwanese population
(C.-C. Chen, 1975). This section will look at the historical evolution of the different health
care systems that have occurred on Taiwan.
Most scholars begin their study of Taiwans public health care systems with the start
of the Japanese colonial period. In 1895 Taiwan was ceded to Japan according to the terms of
the Treaty of Shimonoseki and the Japanese government quickly found that the greatest threat
to the Japanese troops was disease. Much of this had to with the fact that Taiwan is a
subtropical island with very dense foliage. The Japanese troops were being exposed to viruses
and bacteria they had never been exposed to before. Another reason could be the during that
time period there were large outbreaks of the plague that happened in Taiwan as it did in
many other places in Asian.
In order to combat this threat to the troops the Japanese set up committees to
investigate infectious diseases. In 1899 the Investigative Commission of Infectious Diseases
was established to research the causes and prevention of infectious diseases. While this
research might have helped society at large it generally understood that it was undertaken to
help Japanese military, political, and trading interests. In other words, Public health is
important not because individuals had the right to a healthy life but because the good of the
state demands a healthy citizenry (Chin, 1998).

The Japanese also used its police system to impose public health initiatives. When an
infectious disease epidemic occurred in an area, the police force was sent there to force
quarantines. The police force was also responsible for performing jobs that related to
sanitation such as cleaning gutters and inspecting food (Chin, 1998).
The Japanese also controlled the public health system by controlling education and
practice. The medical department was set up at Taipei Imperial University. By educating and
licensing, Japanese regime is able to standardize, regulate and control the training of
physicians (Chin, 1998).
In 1945 Taiwan was ceded back to the government of China1 and the Republic of
Chinas government began to rule the island. In 1949 the ROC government retreated to
Taiwan, after being forced from the mainland by the Chinese Communist Party. One of the
first things that the ROC government did was to move the sanitation department from the
under the police to the Ministry of the Interior. The reason the ROC government was able to
this is possibly because the advancements made under the colonial regime. Japans pushing of
Western medicine and mass vaccinations had changed local Taiwanese ideas about health
policy by the end of the colonial regime. The resistance that was present in the early years
had given way to an acceptance of Western medicine and the modern ideas of public health.
Therefore, the ROC did not need to continue to have the police supervise sanitation activities.
One big public health concern for the ROC was making sure that women and children were
healthy. They set up health stations throughout Taiwan promoting this cause. There were two
reasons for focusing on children. One was to insure the future strength of the state. The other
was that if children learned proper sanitation habits early in life they would carry these habits
with them throughout their life (Chin, 1998).
1 It is beyond the scope of this paper to analyze the Treaty of San Francisco and the Treaty of
Taipei and go into the views of opposing parties whether or whether not Taiwan was given
back to China (or was ever a part of China) and what that might mean now for any
independence movements in Taiwan. For the sake of brevity, the term China is used and is
not intended to allude to any political orientation.

These changes did have impact on public health. The infant mortality rate dropped
from 45% in 1952 to 5% in 2002. Life expectancy also increased for males and females in the
same time period. From 57 and 61 years in 1952 to 75 and 81 years in 2002 respectively (Lu
& Chiang, 2011).
Figure 1 shows the improvements that were made from 1960 onward in Taiwans
health care system. The main focus for the ROC government early on was to increase the
number of practicing physicians per 1000 people. One way they dealt with this was to use
retiring military doctors to fill the demand in the 1970s. Retiring military physicians were
able to take a special exam to receive a license. Because most of these doctors were not
trained in medical schools, there were critiques about the quality of care. But, it did move
more physicians to rural areas, which was needed. The government also increased the number
of medical students by opening up new medical schools.
Another way shown in Figure 1 was to increase the number of hospital beds available
to four per 1000 population. This initiative was done in conjunction with private sector. The
growing economy allowed for the private sector to invest in building new private hospitals.
One largest and most successful of these hospitals is Chang Gung Memorial Hospital, which
was started in 1976.
There were earlier efforts to provide insurance for Taiwanese citizens through
employer insurance plans. There were four of these plans: Labor Insurance (1950),
Government Employee Insurance (1958), Farmers Insurance (1985), and Low-Income
Household Insurance (1990). While these covered up to 57% of the population they still left
some of the most vulnerable population at risk without insurance (Lu & Chiang, 2011).

Figure 1 Basic and health care indicators: Taiwan, 1960-206(Lu & Chiang, 2011)

In 1995, the Legislative Yuan passed the NHI Act. The NHI was implemented five
years ahead of schedule. This is due partly due to the publics demand for universal health
care coverage and also due to political compromise. As would be expected, the accelerated
release was chaos. The approval rating for the program started at 30% in April 1995 went to
55% in January of 1996 and stays around 70% today, making it one of the most popular
government programs (Lu & Chiang, 2011). Also the percentage of insured has risen from
57% when the program started to 97% of the population (R. Gauld et al., 2006; Lu & Chiang,
2011).

Figure 2 Percentage of Population with health insurance Taiwan 1979-1997 (Lu & Chiang, 2011)

Taiwans National Health Insurance is a single payer system with a uniform fee
schedule and a global budget (Chiang, 1997). The system is also characterized by freedom of
choice. This is credited to the high value placed on a market economy in Taiwan. It also leads
to strong competition between hospitals who, because of fixed fees, compete by trying to
offer better quality services (H. Chang, Chang, Das, & LI, 2004). Unlike the United Stated
managed care model the Taiwans NHI offers the insured complete freedom of providers and
services (T.-M. Cheng, 2003). One problem with this type of universal coverage is moral
hazard, which Taiwan tries to prevent by requiring copayments that vary for different
services. About 62% of Taiwans healthcare expenditure is funded by the public sector with
the other 38% coming from private spending, which is mostly out-of-pocket. Taiwan spends
6.1% of GDP on healthcare which is way below the OECD average of 8% (Coopers, 2012)
but second to Japan in spending in Asia (R. Gauld et al., 2006) .

Hong Kong
Hong Kong is a former British colony that has only recently been repatriated to the
Peoples Republic of China in 1997. It is considered one of the most westernized societies in
Asia due to 150 years of British colonial rule. There is no doubt why the health care system
in Hong Kong is mix between the two cultures (Gabrial M. Leung, Wong, Chan, Choi, & Lo,
2005).
Hong Kongs health sector is a mix of various agencies from the Health, Welfare, and
Food Bureau to the Department of Health and Centre for Health Protection. This wide
ranging set of institutions can create a complex web that is sometimes hard to coordinate (R.
Gauld et al., 2006).
The cost of the Hong Kong health system is around 5.6% of gross domestic product,
which well below the OECD average of 8%. Public funding accounts for 56% of total
spending with private funding accounting for 44%. The majority of public funding comes in
the form general tax revenue. The majority of private funding comes from out-of-pocket
expenditures, which comprises a mix of private insurance plans and employer provided
benefits (Gabrial M. Leung et al., 2005).
The mixed health economy where a public National Health Service operates along
side a large fee-for-service private sector can create an environment that is hard to regulate.
With the large number of agencies that are involved within the health sector it can be hard for
the government to enforce needed controls like quarantines. An example of this was during
the SARS epidemic where compartmentalization created problems when no single part of the
health care system was responsible for coordination, and communication between the sectors
was difficult. It was also problematic that the Department of Health has no legal powers of
intervention (R. Gauld et al., 2006).

Figure 3 An overview of the Hong Kong health system (Gabrial M. Leung et al., 2005)

South Korea
Prior to South Koreas universal health care program, its health care system was urban
based and mostly private in 1975 with only 8.8% of the population covered (Peabody, Lee, &
Bickel, 1995). It has been an incredible story that has relied on its economic growth,
willingness to be part of the WHO Health for All campaign, and a mix of authoritarian
government to push the needed reforms through to reach the goals.
South Korea has a very different development story from Taiwan but it still has a lot
in common historically with Taiwan as well. South Korea has its roots in traditional
Confucian culture. Many call Confucian culture patriarchal and list it as reason for most
Asian societies for expecting their government to act in a patriarchal way such as providing
health insurance. South Korea was also a colony of Japan, even though there were differences
in how the colony was run.
One example of how Confucian culture has affected health care in South Korea is
how the elderly are taken care of by family members. In 1975, most health care was paid out
of pocket and when older family members could not afford care, the responsibility passed to
the sons and sons-in-law. In cases where nursing care was needed, a 1983 study showed that a
large percentage of care (37.5%) was provided by daughters-in-law (Peabody et al., 1995).
In 1963 South Korea started its first insurance program. The program however was
unsuccessful because the program was poorly funded and only attracted high risk patients
(Peabody et al., 1995). In 1977 South Korea joined the Health for All initiative started by the
WHO which worked toward providing health care for everyone by the year 2000.
South Korea began the Health for All by working in stages that brought in companies
that had different numbers of employees. The first stage required companies that employed
500 or more workers to establish health insurance societies. In 1981 this was expanded to

include firms that had 100 or more employees and in 1983 it was expanded to include those
with only 16 workers. Today firms are required that have 5 to 15 employees (Peabody et al.,
1995).
A second stage was created that included government workers and private school
teachers. This was expanded in 1980 to include extended families of military personnel. The
insurance was provided by the Korean Medical Insurance Corporation (Peabody et al., 1995).
The above two schemes still left out a large percentage of the population, namely selfemployed workers. This was fixed by creating programs that were subsidized by the
government. There was also a special program to provide free health insurance for the poor
(Peabody et al., 1995).
The current program receives about 55% through public financing using taxes and
social insurance. The remainder (45%) is financed from private sources with 37% of that
being from patient payments (Peabody et al., 1995).

Figure 4 Organization of medical insurance by group and by insurance societies in the Republic of Korea (Peabody et
al., 1995)

South Korean has also worked to increase the availability of services to its population.
Hospital beds have increased from 21,000 in 1975 to 80,000 in 1987. The government has
also worked to open clinics in rural areas to provide those communities with access to
medical care. Almost all of the new hospitals and clinics have been private. The number of
physicians has increased as well as the number of medical schools. Physician numbers have
gone up from one per 2500 population in 1977 for one physician per 1160 in 1984, while
medical schools have more than doubled from 14 to 31 (Peabody et al., 1995).

Discussion
Each one of the above health care systems is unique to its population. While at the
onset of this research I had thought I would compare each and be able to some up with an
idea of which one works better than the others. After researching, however, I have found that
the uniqueness of each system, along with the population it serves, make such a comparison
of better or best not only hard but not useful. I feel it is better to look at each and the possible
challenges it faces along with its strengths and learn how each can be improved.
One of the challenges they all face is controlling rising health care costs. The fastest
way to deal with that has been to raise copayments or government subsidies. One puts a
burden on the population directly while the other can impact the government deficits and hurt
programs in the long run.
Systems like Hong Kong and Taiwan are considered to be risky by the fact there is no
gatekeeper to restrict over use of services by certain populations that would as a result drive
up costs. Each system deals with this issue by a schedule of copayments that discourage
overuse or excessive and repeated therapies. Taiwans information system is also well known
for coordinating patient information and usage in an easy and efficient way that makes it
easier to keep track of patients to prevent repeated services by different doctors.

Taiwan also has an advantage of being a single payer system. A single payer system is
believed to be more efficient from an administrative standpoint. Less man-hours are needed
looking at different fee schedules or organizing payment to and from different sources
(Hussey & Anderson, 2003).
Another problem that faces all systems is rising drug costs. This is especially a
problem in Hong Kong and Taiwan. In the past in Hong Kong the price of physician visit and
medication was bundled together in a way that led some to believe that physicians were over
prescribing medicine to increase their billing (Gabrial M. Leung et al., 2005). This has also
occurred in Taiwan where drugs are billed with a different copayment or sometimes,
depending on the drug, paid out of pocket. There have been criticisms that this had led to over
prescribing in order to increase profits that are locked into a global price system (Lu &
Chiang, 2011). While this obviously is concerning because of increased for patients, it also
creates a potential public health risk. Over prescribing of antibiotics for instance has bee
thought to lead developing antibiotic resistant bacteria such as tuberculosis.
South Koreas strong Confucian values are thought to play a positive role in
controlling health costs. It is believed the strong family values have decreased the need for
nursing homes in the country. Unlike the United States, most terminal patients in South Korea
prefer to stay at home to be taken care of by their family. This is thought to be the reason for
the low number of nursing homes that mainly provide services to elderly patients that do not
have family to take care of them (Peabody et al., 1995). In July of 2000 South Korea merged
more than 350 insurance agencies to create a single insurer system. It is thought that creating
one larger insurer provides benefits such as better capacity for risk pooling (S. Kwon, 2003).

Conclusion

The economic growth paired with the idea that governments should provide services
for its citizens. This idea is often linked to the patriarchal views of Confucianism, which
permeate Asian society. The combination of strong belief in free markets with Confucian
ideals has countered neoliberal arguments that globalization makes the welfare state
unimportant.
Taiwan developed its current healthcare system later than most of its Asian neighbors.
The National Heath Insurance Act was passed in 1995 and quickly covered more 97% of the
population. Despite its rushed implementation, it overcame initial chaos to become one the
most popular government programs reaching approval ratings as high as 70%.
Hong Kong system is more mixed due to the free market health care that grew along
side the British National Health Insurance-like system during its 150-year colonial rule. The
system can at times be hard coordinate, especially in times of disease outbreaks such as
SARS in 2003. There are ongoing efforts to streamline the system to solve this problem.
South Korea adopted the WHO Health for All initiative in the 1970s and worked in
stages to create a multi-payer system. The stages were used to slowly add larger companies
first and then add smaller ones later. In 2000 the system was revised again. The more than
350 insurance agencies were combined into a single payer system that is thought to increase
benefits such as risk pooling.
It is not possible to determine which system, if any, is better than the other, but by
looking at the different systems it is possible to look at ideas that can used to solve problems
in other health care systems. It can be said that no health care system is perfect, and indeed
the health care systems discussed above have evolved and will continue to evolve to offer
solutions to problems that arise in the future.

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